by Nathan Meyer | Aug 14, 2017 | Insurance
In GEICO Indem. Co. v. Smith, 2016 WL 5791532 (D. Ariz. Oct. 4, 2016) (Arizona and Pacific Reporter citations not yet available), the Arizona District Court held that an Insurer who offers its policy limits as a business consideration, but never concedes coverage, is not liable as a matter of law for an excess judgment against its Insured.
In Smith, an Insurer twice denied coverage for a claim, but then offered its $20,000 policy limits as a business consideration when presented with the choice of either paying the policy limits or the Insured executing a “Damron Agreement,” an agreement in which the Insured would stipulate to a $2 million judgment and assign all its rights against the Insurer to the plaintiff. Despite the Insurer’s agreement to pay the policy limits to plaintiff, the Insured and the plaintiff executed the Damron Agreement anyway.
The decision
Plaintiff cited Acosta v. City of Phoenix Indem. Ins. Co., 214 Ariz. 380, 153 P.3d 401 (Ariz. App. 2007), and argued the Insurer was liable as a matter of law for the stipulated $2 million excess judgment. The District Court, however, held that “Acosta does not hold that insurers that make settlement offers are liable for excess judgments as a matter of law.” Rather, Smith explained that Acosta held, “if an insurer concedes coverage” and the concession is not based on the “discovery of new facts going to coverage,” then the insurer cannot argue the insured (or the insured’s assignee) is equitably estopped from using the concession of coverage against the insurer. Since the Insurer in Smith never conceded coverage, Acosta did not apply to render the Insurer liable as a matter of law for the excess judgment.
The primary takeaway
From Smith is that, in Arizona, if an Insurer offers policy limits as a business consideration, then the Insurer should not concede coverage and make it clear that it is not conceding coverage when it offers policy limits.
by Nathan Meyer | Aug 14, 2017 | Insurance
In Double AA Builders, Ltd. v. Preferred Contractors Insurance Company, LLC, — P.3d —-, 2016 WL 7508079, *1 (Ariz. Ct. App. Dec. 30, 2016), the Arizona Court of Appeals reversed the trial court’s grant of summary judgment in favor of an Additional Insured General Contractor and found the “subcontractor exception” to the “your work” exclusion did not apply to the Additional Insured. In so holding, the Court of Appeals explicitly held that the Additional Insured General Contractor was not entitled to broader coverage than the Named Insured Subcontractor.
Facts & Procedural History
The Double AA case arose from the faulty construction of a roof for a Harkins Theatres’ complex.[1] Double AA (“General Contractor”) served as the general contractor for the project and subcontracted with Anchor Roofing, Inc. (“Subcontractor”) to install the roofing system. The Subcontractor was insured by Preferred Contractors Insurance Company, LLC (“Subcontractor’s Insurer”), and added the General Contractor to the Policy as an “Additional Insured.”[2]
When the roof started leaking, causing resultant property damage, Harkins asked the General Contractor to replace the roof, and the General Contractor agreed. The General Contractor then filed an indemnification action against various parties, including the Subcontractor and the Subcontractor’s Insurer. Notably, the General Contractor only sought indemnification for the cost of replacing the roof, but not the cost of the resultant property damage.[3]
After settlement and default, the Subcontractor’s Insurer was the only remaining defendant. The Subcontractor’s Insurer and the General Contractor filed cross-motions for summary judgment regarding coverage for the cost of replacing the roof. The trial court granted the General Contractor’s motion concluding, in relevant part, that the “subcontractor exception”[4] applied to the “your work” exclusion, and, consequently finding coverage because the General Contractor sough indemnity for the Subcontractor’s defective work.[5]
Holding
The Arizona Court of Appeals held that the “subcontractor exception” to the “your work” exclusion did not apply to the Additional Insured General Contractor because the Policy defined the terms “you” and “your” as referring only to the Named Insured.”[6] Additionally, because the “subcontractor exception” did not apply to the Subcontractor (because the General Contractor sought coverage for the Subcontractor’s own defective work), the Additional Insured General Contractor was not entitled to broader coverage than the Named Insured Subcontractor that paid premiums for the Policy.[7]
Rationale
The Court of Appeals explained “the exclusion applies because the case relates only to the Named Insured Subcontractor’s defective work. The exception does not apply because the work was performed by the Named Insured Subcontractor acting as a subcontractor, not by a subcontractor acting on the Named Insured Subcontractor’s behalf.” [8]
The Court of Appeals reasoned that the purpose of the “your work” exclusion is to “prevent liability policies from insuring against the insured’s own faulty workmanship.” Because the Additional Insured General Contractor only sought to recover for the cost of repairing the Named Insured Subcontractor’s defective work, the “your work” exclusion bars recovery unless the “subcontractor exception” to the exclusion applies.[9]
The “subcontractor exception” applies if work was “performed on your behalf by a subcontractor.” The Policy defines “you” and “your” as referring to the “Named Insureds.” Accordingly, the Court of Appeals reasoned the exception only applies if a subcontractor performed the work on behalf of the Named Insured Subcontractor. Because the General Contractor was only an Additional Insured under the Policy, the “subcontractor exception” could not apply to Additional Insured General Contractor.[10]
The Court of Appeals further reasoned that the pertinent Additional Insured endorsements limit an Additional Insured’s coverage under the Policy.[11] The Court explained that because coverage for Additional Insureds is so limited, often no additional premium is required to add a party as an Additional Insured, and so was the case here. The Court refused to allow the Additional Insured General Contractor broader coverage than the Named Insured Subcontractor because it would “render the ‘your work’ exclusion superfluous while requiring the Subcontractor’s Insurer to accept greater risk with no compensation in the form of additional premiums.”[12] Lastly, the Court clarified that the “Separation of Insureds” clause relied upon by the General Contractor does not “transform an Additional Insured into a Named Insured.”[13]
Analysis
The Court of Appeals’ decision confirms two positions insurers have advanced for some time, but for which no Arizona decision provided a clear and concise citation:
1) Insurers are not expected to cover additional risks not contemplated and paid for via policy premiums;[14]
2) Additional Insureds are not entitled to broader coverage than Named Insureds.[15]
[1] Id. at *1.
[2] Id.
[3] Id.
[4] The policy “exclusion” removes from the scope of coverage “ ‘[p]roperty damage’ to ‘your work’ arising out of it or any part of it and included in the ‘products completed operations hazard.’ ” The “exception” provides that the exclusion does not apply “if the damaged work or the work out of which the damage arises was performed on your behalf by a subcontractor.” Id. at 2.
[5] Id.
[6] Id. at *2.
[7] Id. at *3.
[8] Id. at *2.
[9] Id.
[10] Id.
[11] Id. at *3.
[12] Id.
[13] Id.
[14] Id. at *3.
[15] Id.
by Nathan Meyer | Aug 14, 2017 | Insurance
Stafford v. Burns, —P.3d—,2017 WL 164310 (Ariz.App. January 17, 2017)
This is a medical malpractice and wrongful death case arising from emergency medical care rendered after a methadone overdose, the Arizona Court of Appeals “decline [d] to impose a requirement that Offers of Judgment be deemed reasonable before sanctions are imposed under Rule 68(g).”
In Arizona, a Rule 68 Offer of Judgment requires mandatory shifting of post-offer expert fees and double taxable costs if an Insurer, or any defendant, subsequently beats an Offer of Judgment at trial. Rule 68 states, “If the offeree rejects an offer and does not later obtain a more favorable judgment…the offeree must pay, as a sanction, reasonable expert witness fees and double the taxable costs…incurred by the offeror after making the offer…” ARCP 68(g).
In Stafford, the Court of Appeals rejected a “good faith” requirement in Offers of Judgment for two primary reasons.
First, “Arizona courts have uniformly held, consistent with the rule’s plain language, that sanctions imposed by Rule 68(g) are both mandatory and punitive.”
Second, adding a “good faith” requirement would undermine rather than serve the purpose of Offers of Judgment—“to promote settlement and avoid protracted unnecessary litigation.” The Court of Appeals reasoned that a “reasonableness requirement would only increase the cost of litigation by inviting the expenditure of time to resolve an offer’s validity [i.e. reasonableness and/or good faith], driving the parties’ settlement positions further apart.” (emphasis in original).
What are the primary takeaways for insurers in Arizona bad faith cases?
Arizona continues to enforce Offers of Judgment that encourage settlement and Stafford makes it more likely that Arizona will enforce a “Conditioned Offer of Judgment,” i.e. an Offer of Judgment conditioned on no entry of judgment, execution of a Settlement Agreement, and filing a Stipulation to Dismiss. See “How Insurers Can Shift the Risks of Attorney Fees, Expert Fees, and Costs in Arizona Bad Faith Cases.”
by Nathan Meyer | Aug 10, 2017 | Insurance
Because Arizona cases touching on this issue are copious, confusing, and complex, we note the following guidelines—though sometimes conflicting—have emerged from Lee and its progeny and will assist an Insurer’s analysis of whether a court will find an implied waiver of the Privilege:
1. The mental state of an Insurer must be an issue to impliedly waive the privilege.[1]
a. An Insurer cannot impliedly waive the Privilege if it defends a bad faith claim solely on objective reasonableness.[2]
b. A court, however, may reject an Insurer’s claim it is defending a bad faith based solely on objective reasonableness.[3]
2. An Insurer must affirmatively inject the relevance of attorney-client communications into the litigation to impliedly waive the Privilege.[4]
a. These acts do affirmatively inject the relevance of attorney-client communications into litigation:
i. An Insurer asserts its actions were subjectively reasonable based, in part, on its agents’ evaluation of the law and part of that evaluation is informed by counsel.[5]
ii. An Insurer’s adjusters testify that they considered and relied upon the legal opinions or legal investigation of in-house counsel to deny a claim.[6]
iii. Counsel directs an Insurer to act in bad faith, i.e. counsel directs an Insurer to: make an Insured jump through needless adversarial hoops, take actions without a reasonable basis, or delay a claim.[7]
iv. An Insurer asserts a defense dependent upon the advice or consultation of counsel.[8]
v. An Insurer asserts its settlement offers were subjectively reasonable, in part, because it determined it had a strong probability of prevailing on coverage.[9]
vi. An Insured testifying he did not seek policy benefits because, based on prior counsel’s advice, he did not think benefits were available and consequently did not seek benefits earlier.[10]
b. These acts do not affirmatively inject the relevance of attorney-client communications into litigation:
i. An Insurer and counsel simply conferring and/or trading information for advice.[11]
ii. An Insurer taking actions based on counsel’s advice.[12]
iii. An Insurer forming subjective evaluations of its claims and defenses based on counsel’s advice.[13]
iv. An Insured (or an Insurer) filing a bad faith action.[14]
v. An Insurer’s mere denial of bad faith or affirmative claim of good faith.[15]
vi. An Excess Insurer suing a Primary Insurer for bad faith based upon a breach of the duty to give equal consideration to settlement offers within policy limits.[16]
vii. An Insurer relying on advice of counsel to issue a denial letter.[17]
viii. An Insurer consulting with counsel to evaluate the objective reasonableness of its position.[18]
ix. An Insurer asserting its actions were subjectively reasonable and admitting it consulted with counsel regarding the subjectively reasonable actions.[19]
3. An Insurer does not waive the Privilege would deny the Insured access to information vital to the Insured’s claim; i.e. the Insurer cannot use the Privilege as both a sword and a shield.[20]
a. Neither the relevance nor importance alone of attorney-client communications is sufficient to impliedly waive the Privilege.[21]
b. A court probably will not find an implied waiver of the Privilege if the Insured has other evidence of bad faith available.[22]
4. Even if an Insurer impliedly-waives the Privilege, the waiver is limited to content actually communicated to the Insurer.[23] The implied waiver does not extend to counsel’s file.[24]
[1] See Twin City Ins. Co. v. Burke, 204 Ariz. 251, 63 P.3d 282 (Excess Insurer did not waive the privilege, in part, because the mental state and conduct of the Excess Insurer’s agents and counsel were not at issue); Empire West Title Agency, L.L.C. v. Talamante ex rel. Cty of Maricopa, 234 Ariz. 497, 323 P.3d 1148 (Purchaser did not waive privilege, in part, because the Purchaser’s state of mind was not an issue).
[2] See Nguyen v. Am. Commerce Ins. Co., 2014 WL 1381384 *5 (Ariz.App. Apr. 8, 2014) (Memorandum Decision) (Insurer did not impliedly waive the Privilege, in part, because the Insurer defended solely on objective reasonableness).
[3] See Mendoza v. McDonald’s Corp., 222 Ariz. 139, 153-54, 213 P.3d 288, 302-03 (App. 2009).
[4] See State Farm v. Lee, 199 Ariz. 52, 56, 13 P.3d 1169, 1173 (2000) (En Banc) (stating the first and second criteria of the implied waiver test, i.e. a litigant impliedly waives the Privilege if, “(1) assertion of the privilege was a result of some affirmative act, such as filing suit or raising an affirmative defense, by the asserting party; (2) through this affirmative act, the asserting party put the protected information at issue by making it relevant to the case.”); see also Mt. Hawley Ins. Co. v. Slayton ex rel. Cty. of Coconino, 2013 WL 708535 (Ariz.App. Feb. 26, 2013) (Memorandum Decision) (in case which arose from a General Contractor (“GC”) Insurer suing a Subcontractor (“Sub”) Insurer to recover defense and indemnity costs, Court of Appeals held that the GC Insurer did not impliedly waive the Privilege, in part, because the GC Insurer did not inject attorney-client communications into the lawsuit by attempting to rely on attorney-client communications to prove its defense and settlement of the underlying case was reasonable).
[5] See Lee, 199 Ariz. at 57, 13 P.3d at 1174; Nguyen, 2014 WL 1381384 *5 (Insurer did not impliedly waive the Privilege, in part, because the Insurer never took the position that “its subjective view of the law was reasonable ([much less that its] subjective view necessarily incorporated advice from its counsel.”); Ingram v. Great Am. Ins. Co., 112 F.Supp. 3d 934, 939 (D. Ariz. 2015) (Insurer impliedly waived privilege where it denied workers compensation claim after a subjective evaluation of the law).
[6] Roehrs v. Minnesota Life Ins. Co., 228 F.R.D. 642, 646-647 (D. Ariz. 2005) (Order) (an Insurer impliedly waived the Privilege because the adjusters affirmatively injected attorney-client communications into the litigation by testifying at their depositions that “they each considered andrelied upon, among other things, the legal opinions or legal investigation [of in-house counsel] in denying” the claims) (emphasis added); but see Safety Dynamics Inc. v. Gen. Star Indem. Co., 2014 WL 268653 at *1 (D. Ariz. Jan. 24, 2014) (Order) (Roehrs is not precedent, distinguished Roehrs, and declined to follow Roehrs).
[7] See Mendoza, 222 Ariz. at 153-154, 213 P.3d at 303-04.
[8] Everest Indemnity Ins. Co. v. Rea, 236 Ariz. 503, 342 P.3d 417, 419 (App. 2015).
[9] In Cosgrove v. Nat’l Fire & Marine Ins. Co., 2016 WL 4578139 (D. Ariz. Sept. 2, 2016), a bad faith case arising from an alleged breach of the duty to give settlement offers within policy limits equal consideration, the District of Arizona held that an Insurer impliedly waived the Privilege with coverage counsel because the Insurer asserted its settlement decisions were subjectively reasonable, in part, because: it determined there was an 80 percent chance the claims were not covered, this “determination involved[d] an evaluation of the law”; “it [was] highly likely [the Insurer’s] determination was informed by counsel’s advice”; and it was “more probable than not that [the Insurer] not only consulted with [coverage counsel] but necessarily relied on the information and advice [it] received.” Cosgrove, 2016 WL 4578139 *5.
[10] Barten v. State Farm Mut. Auto. Ins. Co., 2015 WL 11111310 (D. Ariz. June 19, 2015) (Order) (in bad faith case arising from a car accident, District of Arizona held that an Insured would impliedly-waive the Privilege regarding his decision not to seek attendant care benefits if he affirmatively injected the issue by testifying that he did not think attendant care benefits were available and consequently did not seek such benefits earlier based on his previous counsel’s advice).
[11] See Lee, 199 Ariz. at 66, 13 P.3d at 1183 (“We assume client and counsel will confer in every case, trading information for advice. This does not waive the privilege.”); Safety Dynamics, Inc. v. Gen. Star Indem. Co., 2013 WL 11299209 at *3, 4 (D. Ariz. Aug. 8, 2013) (Order) (Insurer did not impliedly waive the Privilege, despite an adjuster’s testimony that he relied on advice of counsel to issue a denial letter, in part, because Lee noted that “client and counsel confer[ing]” does not waive the privilege, so the deposition testimony was “insufficient by itself to waive the privilege”).
[12] See Lee, 199 Ariz. at 66, 13 P.3d at 1183 (“We assume most if not all actions taken will be based on counsel’s advice. This does not waive the privilege.”); Safety Dynamics, 2013 WL 11299209 at *3, 4 (Magistrate ordered that an Insurer did not impliedly waive the Privilege, despite an adjuster’s testimony that he relied on advice of counsel to issue a denial letter, in part, because Lee noted that “action taken…based on counsel’s advice” does not waive the privilege, so the deposition testimony was “insufficient by itself to waive the privilege”).
[13] See Lee, 199 Ariz. at 66, 13 P.3d at 1183 (“Based on counsel’s advice, the client will always have a subjective evaluations of its claims and defenses. This does not waive the privilege.”); Nguyen, 2014 WL 1381384 *5 (Insurer did not impliedly waive the Privilege, in part, because the Insurer merely consulted counsel to evaluate the objective reasonableness of its position).
[14] See Lee, 199 Ariz. at 62, 13 P.3d at 1179; Burke 204 Ariz. at 255, 63 P.3d at 286; Empire West, 234 Ariz. 499, 323 P.3d 1150; Slayton, 2013 WL 708535 (GC Insurer did not impliedly waive the Privilege, in part, by simply filing the lawsuit).
[15] See Lee, 199 Ariz. at 62, 13 P.3d at 1179.
[16] See Burke, 204 Ariz. 251, 63 P.3d 282
[17] Safety Dynamics, 2013 WL 11299209 at *3, 4 (Insurer did not impliedly waive the Privilege, despite an adjuster’s testimony that he relied on advice of counsel to issue a denial letter, in part, because Lee noted that “client and counsel confer[ing]” does not waive the privilege, so the deposition testimony was “insufficient by itself to waive the privilege”).
[18] See Nguyen, 2014 WL 1381384 *5 (Insurer did not impliedly waive the Privilege, in part, because the Insurer merely consulted counsel to evaluate the objective reasonableness of its position).
[19] See Everest, 236 Ariz. 503, 504, 342 P.3d 417, 418 (Insurer did not impliedly waive the Privilege despite asserting its actions were subjectively reasonable and admitting it consulted with counsel regarding the subject settlement agreement) (“Lee expressly held that the assertion of a subjective good faith defense coupled with consultation with counsel did not, without more, waive the attorney-client privilege.”).
[20] See Lee, 199 Ariz. at 56, 13 P.3d at 1173 (stating the third criteria of Arizona’s implied waiver test, i.e. a litigant impliedly waives the Privilege if, “(3) application of the privilege would have denied the opposing party access to information vital to his defense.”); Id. at 65, 13 P.3d at 1182 (Under the sword and shield analysis, the Insurer’s “claims managers cannot testify that they investigated the state of the law and concluded and believed they were acting within the law but deny [the Insureds] the ability to explore the basis for this belief and to determine whether it might have known its actions did not conform to the law.”); Burke, 204 Ariz. at 255, 63 P.3d at 286 (questions that determine whether an Insurer implied waived the Privilege include: (a) “Would the application of the privilege deny [Insurer] access to information vital to its defense?”; and (b) “Would recognizing the privilege make it impossible for the factfinder to fairly determine the very issue raised by [Insurer]?”); Mendoza, 222 Ariz. at 155, 213 P.3d at 304 (The Insurer “sought to shield from [the Insured] the very evidence she would need to challenge [the Insurer’s] representations that its adjusters subjectively believed their actions were reasonable and taken in good faith.”); Everest, 236 Ariz. 503, 342 P.3d at 418 (the Privilege “may be deemed waived [only] when application of the privilege would deny an opposing party access to necessary information to counter a claim or defense asserted by the other party.”); Ingram, 112 F. Supp. at 939 (the Insurer’s adjusters could not “testify that they investigated the state of the law and concluded and believed they were acting within the law but deny [the Insureds] the ability to explore the basis for this belief and to determine whether it might have known its actions did not conform to the law.”).
[21] See Burke, 204 Ariz. at 256, 63 P.3d at 287 (as Lee noted, “there is more than relevance and materiality needed to find a waiver, for communications with counsel are almost always very relevant and material.”); Lee, 199 Ariz. at 58, 13 P.3d at 1175; Empire West, 234 Ariz. at 499, 323 P.3d at 1150 (“neither the relevance nor pragmatic importance alone of the information sought will support a finding that the attorney-client privilege has been waived.” (internal cites omitted); Everest, 236 Ariz. 503, 342 P.3d at 419 (it “is not sufficient that the information sought is relevant or important to a claim or defense…”).
[22] See Lee, 199 Ariz. at 56, 13 P.3d at 1173 (again, stating the third criteria of the implied waiver test, i.e. a litigant impliedly waives the Privilege if, “(3) application of the privilege would have denied the opposing party access to information vital to his defense.”); Empire West, 234 Ariz. at 500, 323 P.3d at 1151 (an implied waiver should not be found unless the party seeking the attorney-client communications demonstrates that denial of the waiver would “undermine its defense” and there are not “other means of obtaining information about what [a litigant] knew or should have known…”) (even if the Purchaser’s state of mind was at issue, the Title Agent did not “demonstrate that denying it access to the requested communications would undermine its defense” because it had “other means of obtaining information about what [the Purchaser] knew or should have known regarding the easement’s purported abandonment.”); Slayton, 2013 WL 708535 (GC Insurer did not impliedly waive the Privilege, in part, because the Sub Insurer had reasonable alternatives to seeking privileged communications to prove its case, such as retaining an expert to testify the GC Insurer did not act reasonably in defending and settling the underlying action).
[23] See Cosgrove, 2016 WL 4578139 (limited implied waiver to “communication with [coverage counsel] to the extent those communication addressed the coverage issues in the underlying case on which [the Insurer] based its settlement decisions.”); Ingram, 112 F. Supp. 3d at 940 (limited the implied waiver to “only those communications pertaining to the law and information that was part of what [the Insurer] knew in reaching its evaluation of the law” and the Insurers were “not entitled to discovery of all of counsel’s communications.”); City of Glendale v. Nat’l Union Fire Ins. Co. of Pittsburgh, PA, 2013 WL 1797308 at *6, 7 (D. Ariz. Apr. 29, 2013) (Order) (a case which arose from an Insurer’s refusal to defend and indemnify and considered an Insurer’s assertion of an advice-of-counsel defense and consequent explicit waiver of the Privilege rather than an implied waiver of the Privilege, held the Insurer’s waiver extended only to “counsel’s advice that was contained in the adjuster’s notes in the claims file” and did not extend to “documents in [counsel’s] files that [were] not communicated to the Insurer.”); Roehrs, 228 F.R.D. at 647 (Magistrate concluded an Insurer impliedly waived the Privilege, but limited the waiver to communication with certain adjusters on certain issues).
[24] Id.
About the Author: Nathan D. Meyer is a Partner at the Phoenix law firm of Jaburg Wilk. One of his specialties is insurance coverage and bad faith. Nate advises and represents insurance clients in coverage, bad faith, contribution and liability matters.
by Nathan Meyer | Aug 8, 2017 | Insurance
In Orosco v. Maricopa County Special Health Care District, (2017 WL 469690) (Ariz. App. February 2, 2017), a medical malpractice case in which the jury’s $4.25 million verdict exceeded two offers of judgment made by plaintiffs, the Arizona Court of Appeals held “a subsequent offer of judgment does not extinguish the effect of an offeree’s failure to accept a prior offer when the judgment is less favorable to the offeree than both offers” and consequently ruled that a plaintiff was entitled to pre-judgment interest from the date of the first offer of judgment.
Under Arizona’s offer of judgment rule, Rule 68, if an offeree rejects an offer of judgment and “does not obtain a more favorable judgment,” then the offeree must pay sanctions of:
(1) Reasonable post-offer expert witness fees,
(2) Double the post-offer taxable costs, and
(3) “Prejudgment interest on unliquidated claims accruing from the date of the offer.” See ARCP 68(g).
In Orosco, the Arizona Court of Appeals held a subsequent offer of judgment does not extinguish the effects of an offeree’s failure to accept an initial offer of judgment for three primary reasons.
(1) The weight of authority from other jurisdictions allows an offeror to collect sanctions from a first offer of judgment.
(2) “A contrary outcome might deter a plaintiff from making an early offer of judgment or from later adjusting an earlier demand.”
(3) Recovery from the first offer of judgment is consistent with Rule 68’s “purpose to encourage the settlement of lawsuits before trial” and to “avoid protracted litigation.” “Permitting an offeror to make additional offers of judgment encourages the parties to continue to evaluate their cases as the litigation proceeds and thereby generally fosters settlement.”
What are the primary takeaways for insurers in Arizona bad faith cases (or any Arizona litigant)?
(1) Arizona insurers should treat offers of judgment like Chicago voting and make them “early and often” to shift the risks of attorney fees, expert fees, and costs.
(2) An insured/plaintiff’s early offer of judgment could substantially increase an insurer’s exposure on a large claim.
(3) Arizona continues to enforce offers of judgment that encourage settlement and Orosco makes it even more likely that Arizona will enforce a “Conditioned Offer of Judgment,” i.e. an Offer of Judgment conditioned on no entry of judgment, execution of a Settlement Agreement, and filing a Stipulation to Dismiss.
Also See “How Insurers Can Shift the Risks of Attorney Fees, Expert Fees, and Costs in Arizona Bad Faith Cases.”
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